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Xi Makes His Mark with New Five Year Plan

China’s latest blueprint for social and economic policy reflects its leader’s determination, even in the face of economic challenges.

Xi Jinping attends the second Understanding China Conference on 3 November 2015 in Beijing. Photo by Getty Images.

It is a long time since China was a fully planned economy and the continuance of a system of five year plans may seem something of an anachronism. But they remain important political and programmatic documents. The Communique from the Fifth Plenum of the 18th Central Committee, held at the end of October, marked the first detailed public presentation of the main lines of the 13th Five Year Plan, which will run from 2016 to 2020. With this, the economic policy-making of the Xi Jinping administration looks set to finally escape the shadow of its predecessors and politically, Xi seems increasingly confident of his control over the party machine. But the economic challenges over the next five years will be more serious than China has faced for some time.

Economy

Xi’s creation and assumption of the leadership of the Party Small Group for Reform at the Third Plenum in 2013 clearly signalled his intention to be at the heart of economic policy-making. The Premier Li Keqiang has been largely overshadowed, increasingly the executor and not the designer of policy. The coming plan is very much the brainchild of the Xi administration and very likely of Xi himself, at least in its strategic direction.

But the economic background is not as favourable as might have been expected when the drafting started a year or so ago. Questions over the administration’s capacity emerged over the summer and the mini-financial crisis over China’s stock market. There are continuing worries over the government’s ability to handle the consequences of slower growth. This means that ambitious development targets needed to be scaled down in favour of a new realism. In his keynote speech to the plenum, Xi acknowledged that a lot of new situations and problems would be faced in the coming five years, chief among them the plateauing economy. This would be the ‘new normal’ against which China’s economic and social development would be taking place.

So the emphasis was on more modest, greener growth. But even so it aims for the achievement of a ‘moderately prosperous society’ by its conclusion. Key targets include the doubling of 2010 GDP by 2020 (still implying a sustained growth rate of seven per cent) and of the average income of urban and rural residents.

Development

In a subsequent speech, Xi said that the programme was informed by five particular approaches to development: ‘innovation, coordination, the environment, opening up and sharing.’ Concern over innovation is not of itself new, but the leading place given to it is, reflecting the increasing complexity of China’s economy as well as the problems of taking China to the next stage and avoiding pitfalls such as the middle income trap. Similarly there is a long overdue recognition of the centrality of environmental questions to the success of China’s continued development. This bodes well for a more positive attitude from China at the forthcoming Paris conference on climate change. ‘Opening up’ underlines again China’s commitment to greater engagement and integration with the world economy, while message of shared development is directed at the problem of widening inequalities, calling for the fruits of development to be shared by all the people – a more practical approach to the harmony beloved of the previous leadership.

Party politics

Politically, final lines were drawn under the careers of a number of Central Committee members who had fallen foul of Xi’s anti-corruption campaign, which has not let up. The need for improved internal party governance was highlighted as was the need put the party at the heart of the project of leading the country to ‘seize a major victory in the decisive state of comprehensively building a moderately prosperous society’. But it is perhaps too early for the serious politicking which will occur around the next party congress due in 2017, so there were no new political revelations.

One-child policy

The big news from the Plenum was the almost throw away announcement of the end of the one-child policy. There was not, of course, any acknowledgement of the pain and suffering the policy had caused over the years. The policy itself was probably largely irrelevant from a demographic point of view, as other factors seem largely responsible for China’s current low birth rates, and its lifting is unlikely to result in a new spurt of population growth. There is, anyway, still a population control policy in place (the limit is now two children) together with the whole bureaucratic apparatus associated with it. The coercive arm of the state has not been removed, though it may have a lighter touch in future.